The healthcare real estate industry is booming, and for good reason. In the United States alone, healthcare spending is expected to reach $5.5 trillion by 2025. This growth is being driven by an aging population, the expansion of insurance coverage, and the increase in demand for outpatient services. As a result, healthcare real estate is one of the most sought-after investment opportunities today. If you’re thinking of getting involved in this industry, here are 7 reasons why you should.
The current state of healthcare real estate
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There are a number of reasons why healthcare real estate is growing. First, there is an aging population that is increasingly in need of medical care. This demographic shift is driving demand for more healthcare facilities and services.
In addition, advances in technology are changing the way care is delivered, making it more convenient and accessible. This is leading to more outpatient procedures and treatments, which require less space than traditional inpatient facilities.
The aging population and its impact on healthcare real estate
As the baby boomer population ages, healthcare real estate is becoming an increasingly important asset class.
Investors are taking note of this trend and are pouring money into healthcare real estate, driving up prices and creating a seller’s market. This is good news for those with existing holdings in the sector, but it could make it difficult for new investors to enter the market.
The Affordable Care Act and its impact on healthcare real estate
Prior to the ACA, the healthcare industry was already growing at a rapid pace. However, the ACA has accelerated this growth even further. According to a report by JLL, the demand for medical office space has increased by nearly 30% since the ACA was enacted in 2010.
There are several reasons for this increase in demand. First, the ACA has resulted in an expansion of insurance coverage. This means that more people are now able to afford medical care. This is due to the fact that the ACA provides financial incentives for PCPs to expand their practices.
The rise of telemedicine and its impact on healthcare real estate
The rise of telemedicine has been a game-changer for healthcare real estate. With more and more patients seeking care from the comfort of their own homes, the demand for outpatient facilities and medical office space has increased.
Healthcare real estate developers are responding to this trend by investing in properties that are well-suited for telemedicine. These properties typically have ample parking, easy access to public transportation, and plenty of space for patients to be seen by doctors and nurses via video conference.
The consolidation of the healthcare industry and its impact on healthcare real estate
As the healthcare industry consolidates, hospital systems are looking to optimize their real estate portfolios by consolidating facilities, selling off excess property, and leasing rather than owning buildings. This has led to an increase in demand for healthcare real estate, especially for Class A medical office space.
The consolidation of the healthcare industry is also having an impact on the types of facilities being developed. There is increased demand for outpatient care centers and ambulatory surgery centers, as these provide more cost-effective care than traditional hospitals. Additionally, senior housing is becoming an increasingly important asset class as the population ages.
The increasing costs of healthcare and its impact on healthcare real estate
In 2017, the average cost of healthcare per capita was $10,739, which is nearly double the average cost in 2000 ($5,315). This increase in costs is having a major impact on healthcare real estate.
As the costs of healthcare continue to rise, so does the demand for quality healthcare facilities. This demand is driving up the prices of healthcare real estate, making it one of the fastest-growing sectors in commercial real estate. Healthcare real estate includes hospitals, clinics, nursing homes, assisted living facilities, and other types of medical office buildings.
The future of healthcare real estate
There are several reasons why healthcare real estate is growing. This industry growth is due to several factors, such as an aging population, advances in medical technology, and increases in health insurance coverage.
Another reason for the growth of healthcare real estate is the increasing demand for outpatient care. Outpatient care facilities, such as clinics and surgery centers, are becoming more popular as patients seek care that is more convenient and less expensive than traditional hospital care.